At the time that John Randel was surveying the island in preparation for the Commissioners' Plan of 1811, the Bloomingdale Road (now Broadway) angled away from the Bowery at an acute angle that would have been so awkward to build on, that the Commissioners decided to form a square at the union.[11] In 1815, by act of the state legislature, this former potter's field became a public commons for the city, at first named Union Place.[5][12]

In 1832, when the space was surrounded by empty lots Samuel Ruggles, one of the founders of the Bank of Commerce and the developer of Gramercy Park to the northeast, convinced the corporation to name it Union Square and enlarge the commons to 17th Street on the north and extend the axis of University Place to form the square's west side. Ruggles obtained a fifty-year lease on most of the surrounding lots from 15th to 19th Streets, where he built sidewalks and curbs. In 1834 he convinced the Board of Aldermen to enclose and grade the square, then sold most of his leases and in 1839 built a four-storey house facing the east side of the Square.

May Day 1913, strikers and protesters rally in Union Square, with signs in Yiddish, Italian and English

2006 Union Square protest

A fountain was built in the center of Union Square to receive water from the Croton Aqueduct, completed in 1842. In 1845, as the square finally began to fill with affluent houses, $116,000 was spent in paving the surrounding streets and planting the square, in part owing to the continued encouragement of Ruggles. The sole survivors of this early phase, though they have been much adapted and rebuilt, are a series of three- and four-story brick rowhouses, 862–866 Broadway, at the turn where Broadway exits the square at 17th Street. The Everett House on the corner of 17th Street and Fourth Avenue (built 1848, demolished 1908) was for decades one of the city's most fashionable hotels.[13]

In the early years of the park a fence surrounded the square's central oval planted with radiating walks lined with trees. In 1872, Frederick Law Olmsted and Calvert Vaux[14] were called in to replant the park, as an open glade with clumps of trees.

At first the square, the last public space that functioned as the entrance to New York City,[15] was largely residential – the Union League Club first occupied a house loaned for the purpose by Henry G. Marquand at the corner of 17th Street and Broadway – but after the Civil War the neighborhood became largely commercial, and the square began to lose social cachet at the turn of the twentieth century. Tiffany & Co., which had moved to the square from Broadway and Broome Street in 1870, left its premises on 15th Street to move uptown to 37th Street in 1905; the silversmiths Gorham Company moved up from 19th Street in 1906. The last of the neighborhood's free-standing private mansions, Peter Goelet's at the northeast corner of 19th Street, made way for a commercial building in 1897.

New York City's first commercial theater district was known as the Rialto, and was concentrated in and around Union Square, the south side of which was called the Rialto after the commercial district in Venice, starting in the 1870s.[16][17][18] Over time, the theater district moved uptown into less expensive neighborhoods, and eventually into the Theater District.[16][19]

Before the Civil War, theatres in New York City were primarily located along Broadway and the Bowery up to 14th Street, with those on Broadway appealing more to the middle and upper classes and the Bowery theatres attracting immigrant audiences, clerks and the working class. After the war, the development of the Ladies' Mile shopping district along Fifth and Sixth Avenues above 14th Street had the effect of pulling the playhouses uptown, so that a "Rialto" theatrical strip came about on Broadway between 14th and 23rd Streets, between Union Square and Madison Square.[20]

At the same time, a transition from stock companies, in which a resident acting company was based around a star or impresario, to a "combination" system, in which productions were put together on a one-time basis to mount a specific play, expanded the amount of outside support needed to service the theatrical industry. Thus, suppliers of props, costumes, wigs, scenery, and other theatrical necessities grew up around the new theatres. The new system also needed an organized way to engage actors for these one-off productions, so talent brokers and theatrical agents sprang up, as did theatrical boardinghouses, stage photographers, publicity agencies, theatrical printers and play publishers. Along with the hotels and restaurants which serviced the theatregoers and shoppers of the area, the Union Square Rialto was, by the end of the century, a thriving theatrical neighborhood, which would soon nonetheless migrate uptown to what became known as "Broadway" as the Rialto became subsumed into the more vice-oriented Tenderloin entertainment district.[20]

The park has historically been the start or the end point for many political demonstrations. In April 1861, soon after the fall of Fort Sumter, it was the site of a patriotic rally of perhaps a quarter of a million people that is thought to have been the largest public gathering in North America up to that time. In the summer of 1864 the north side of the square was the site of a "Sanitary Fair".

Union Square has been a frequent gathering point for radicals of all stripes to make speeches or demonstrate. In 1865, the recently formed Irish republicanFenian Brotherhood came out publicly and rented Dr. John Moffat's brownstone rowhouse at 32 East 17th Street, next to the Everett House hotel facing the north side of the square, for the capitol of the government-in-exile they declared.[21][22] On September 5, 1882, in the first Labor Day celebration, a crowd of at least 10,000 workers paraded up Broadway and filed past the reviewing stand at Union Square. Although the park was known for its labor union rallies and for the large 1861 gathering in support of Union troops, it was actually named for its location at the "union" of Bloomingdale Road (now Broadway) and Eastern Post Road (now extinct) decades before these gatherings.[23] On March 28, 1908, an anarchist set off a bomb in Union Square which only killed himself and another man.[24]

In the days and weeks following the September 11 attacks in 2001, Union Square became a primary public gathering point for mourners. People created spontaneous candle and photograph memorials in the park and vigils were held to honor the victims. This was a natural role for the Square as Lower Manhattan below 14th Street, which forms Union Square's southern border, briefly became a "frozen zone," with no non-emergency vehicles allowed and pedestrians sometimes stopped and asked why they were venturing south by police and national guardsmen. In fact, for the first few days following the attacks, only those who could prove residency below 14th Street could pass. The Square's tradition as a meeting place in times of upheaval was also a factor.

In March 2008, an eighteen-month renovation began on the northern end of the park. Proponents of the plan describe it as the completion of a renovation of Union Square Park that began in the mid-1980s that will improve the park by increasing the amount and quality of playground space, improving the quality and function of the public plaza, rehabilitating the badly deteriorating bandshell structure, improving the working conditions for park employees, and maintaining the "eyes on the street" presence of a restaurant at the heart of the park. Protests and political action in response to the original renovation plans resulted in a reduction in the degree to which the pavilion was to be renovated, a reduction in the total amount of space that the restaurant would occupy, and an increase in the amount of dedicated play space, but stiff opposition remains to the idea that any commercial uses might occupy the pavilion. Despite the fact that the overall amount of play space in the park will be increased as a result of the renovation, those critical of the plan claim that the bandshell pavilion itself ought to be converted to play space.[27][28] The fate of the historic pavilion building is uncertain and has been brought before the State Supreme Court.[29][30] On March 30, 2009, a judge dismissed the lawsuit against the renovation, paving the way for a seasonal restaurant in the pavilion.[31]

One element of contention not related to the restaurant concession is the inclusion of a single line of street trees, spaced 30 feet (9.1 m) apart, along the north side of the plaza. Despite rumors to the contrary, the inclusion of trees was made possible without reducing the usable gathering space of the plaza by the simultaneous decision to remove a painted median strip, that had separated eastbound and westbound traffic along 17th Street, thus increasing the northern limits of the plaza by several feet. Some critics feel that this line of trees will make the space less useful for large rallies although no barriers to free movement across 17th Street are being introduced and the "temporary" metal rails, welded together to make a continuous fence along the north side of the site, will be removed as part of the renovation of the plaza. A double line of trees along 17th Street had been planted years earlier as a monument to victims of the Armenian Genocide.

During the renovation the Union Square Greenmarket was temporarily relocated to the west side of the park, returning to the north end by April 4, 2009.

In 1976, the Council on the Environment of New York City (now GrowNYC) established the Greenmarket program, which provided regional small family farmers with opportunities to sell their fruits, vegetables and other farm products at open-air markets in the city. There were originally seven farmers at the first Greenmarket, and their selection sold out by noon.[32] That summer, two more markets opened in New York City. Despite some backlash from local merchants and supermarkets who believed the Greenmarket was cutting into their profits, more markets opened in the city.

Today, the Union Square Greenmarket – the best-known of the markets – is held Mondays, Wednesdays, Fridays, and Saturdays between 8 AM and 6 PM year round. The market is served by a number of regional farmers, as the average distance between farmers and the market is 90 miles (140 km). During peak seasons, the Greenmarket serves more than 250,000 customers per week,[33] who purchase more than one thousand varieties of fruits and vegetables can be found at the Greenmarket;[34] and the variety of produce available is much broader than what is found in a conventional supermarket.[35]

Union Square is also known for the Union Square Holiday Market, which is held November 23 through December 24. Temporary booths are filled with over 100 craftsmen, who sell items ranging from candles and perfume to knitted scarves and high-end jewelry.

Union Square is a popular meeting place, given its central location in Manhattan and its many nearby subway routes. There are many bars and restaurants on the periphery of the square, and the surrounding streets have some of the city's most renowned (and expensive) restaurants. S. Klein's department store promoted itself in the mid-20th century as an "On the Square" alternative to higher prices uptown, and late in the century several big-box chain stores established a presence, including Barnes & Noble, Babies "R" Us and Staples. In addition, the W Union Square Hotel opened at the park's northeast corner, in the landmark building that formerly housed the Guardian Life Insurance Company of America.

The Union Square Partnership (USP), a business improvement district (BID) and a local development corporation (LDC), was formed in 1984 and became a model for other BIDs in New York City. As of 2006 it had a US$1.4 million budget. Jennifer E. Falk became its executive director in January 2007.[36]

^Olmsted and Vaux were carrying out their plan for Central Park; their plan, and the original plan, are represented in bronze plaques with very low relief, set into the sidewalks near the southwest and southeast corners.